Employers Need to Brace For a Tight Labor Force and Higher Wages!

Buried in the news of robust U.S. job growth in June (287,000 jobs added) is that pay has risen at the fastest annual rate since 2009 (2.6%). Also, the labor market has tightened. The shoe has shifted to the other foot – it’s an employees’ job market! Smart employers will adjust their talent management policies for an era of tough recruiting and even tougher retention.

A new report issued by the Society of Human Resources Management shows that many hiring managers are reporting that they cannot fill vacancies. Sixty-eight percent of HR professionals said they are having a hard time recruiting candidates for full-time positions.

There are many reasons for their struggles. Half of HR professionals said that candidates just don’t possess the needed work experience. Another 34% of respondents said their organizations’ salaries are not competitive for the market, and job seekers are letting them know about it – more than 1 in 5 HR professionals said that candidates are rejecting the compensation package.[i]

Despite the high job offer rejection rate, pay rates for new hires are not improving dramatically, according to data from SHRM’s Leading Indicators of National Employment (LINE) report. Many organizations are keeping new-hire compensation flat and may be directing more resources toward benefits as part of compensation packages.[ii]

The smart employer will shift strategies

The strategy of keeping wages flat or meager won’t work, unless you are satisfied with relatively unskilled or less experienced workers. Employees are not interested in the barista bars, cold cereal breakfast bars, or crowded, noisy open office bays.

What willwork are the following talent management strategies:

Keep your wages competitive. Research consistently shows that employees, and certainly the best of employees, expect their wages to be competitive for their industry and region. As you do your planning for 2017, build in higher pay increases, not only for new hires, but also for your current workforce, especially your highest performers.

What employees really want. Research consistently shows that the best employees want employers to provide a great work experience and opportunities to be innovative. This includes interesting work challenges, current workplace technology, feedback, career development (including training), flexible work arrangements, and paid time off[iii]. The fad of barista and breakfast bars, allowing pets to come to work, and wellness classes, while popular, won’t help you retain your best workers. For more on great flexible workplace strategies see my blog, Flexible Work Environments will help you win the war for talent!”

Promote supportive, interactive leadership practices. For most employees, their managers and co-workers are the company. Do your leaders meet with employees weekly to understand the obstacles they are facing, and then provide coaching on how to overcome them? Are your leaders constantly offering clarification on changing business environments, business strategies, and work goals? Are they focused on constructive feedback and recognition? Make sure that top-down, micro-managing leadership doesn’t trigger turnover. Instead, promote interactive, engaging leadership. For more information on how to do this, see my blog, The real key to employee retention may surprise you!

Focus on retaining your best employees. Great employees are always seeking optimal opportunities. A survey from Jobvite found that 51% of employees are actively seeking another job.[iv] TINYpulse reports that 25% of all employees would leave for a 10% raise.[v] If a top employee came to you to say that they are leaving for a higher paying job or “better opportunity,” I know from the school of hard knocks that it’s probably too late to retain them. My advice is to constantly tell your best employees that you appreciate their fine work. Help them develop in their careers. Give them challenging work, exciting development opportunities, recognition and rewards. Then, provide the 10% increase your competition will offer them–before they receive that offer.

Are you facing a competitive labor market? Is your turnover rising? What are your talent management strategies? Join the discussion.

Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults on talent management, leadership development and coaching, innovation, and other strategic initiatives. Please e-mail Victor at victorassad6@gmail.com or visitwww.victorhrconsultant.com. For innovation visit www.InnovationOne.US.